Harsh Letter received from Kensington *Claim struck out in court*

[jamorgan]

Hi zootscoot, hope your having a wonderful christmas.

 

There's no mention of a consideration to strike out the claim in this order

 

What do I need to do now,I havent sent anything to the solicitors or the court yet, that includes the directions or covering letter

been so busy with work before christmas but now obviously need to get something sorted before the 30th Dec.

What sort of evidence would they be expecting me to send them.Would that be letters of complaints I have sent and do they want my mortgage offer etc ?

Thanks again for your help

Jamorganx

[zootscoot]

Hi jamorgan,

 

Its not quite clear as to whether the CMC is in relation to the claim itself or for the application to strike out and counter claim. It's important to know this because if its in relation to the application itself you are the claimant, however, if its in relation to the strike out and counterclaim you could be the defendant. If you are the claimant then your submission is in response to their application and need not be filed until the 12th Jan. If you are the defendant you have to submit your submissions by 30th.

 

It would be best to call the court to find out.

[jamorgan]

The first letter recieved on the 6th December was from the courts advising of a CMC on the to be held 19th Jan.

 

Second letter was recieved on the 8th Dec from Drydens (solicitors) advising an application has been lodged to strike out the claim and/or list the application at the same time as the CMC, also we would be served with a copy of the application and surporting evidence,which we have not recieved in the post.

 

Then 19th Dec court has advised the application will be heard at the CMC.

x

[zootscoot]

It looks like its the application to strike out that is being heard although the orders state that the defendant must put evidence of their application which sounds as tho they are referring to the bank's application to strike out and its their evidence which needs to be produced by the 30th. You would then need to respond to this by the 12th.

 

You might want to check this out with the court.

 

All the best

 

Zoot

[jamorgan]

Thanks a bunch zootscoot

No answer at the courts as yet,will try again later.

x

[jamorgan]

Ok,

Yesterday I recieved a copy of the allocation to strike out the claim and the client's witness statement. (due date was the 30th)

It's basiclly 9 pages long and then some documents thrown in, ehich ive seen about three times during this claim.

Would you like me to post this allocation to strike out on here or not.

 

Introduction

1. I am the defendant's legal rep and have conduct of this case subject to supervision of a partner.I am duly authorised to make this statment on behalf of the defendant in support of their defence and counterclaim.

2. The facts and matters contained within my statement are either within my own knowlwdge and are true,or derived from the sources set out in this witness statement is a bundle of documents

My involvment in this case.

3 I work in the technical division of my firm and deal with non standard matters.

4. I have been involved in this case since the claim was issued.

5. The claimant,by her claim form issued on the 20th Sept,seeks repayment of a charge to total of £7,318.32 plus interest.

6.The claimant essentially contends that these charges are unenforceable by vertue of the UCT in Consumer Contracts Reg 1999,the UCT Act 1977 and the commom law.

7. The Defendant,by its Defence dated 25th Sep,denies the claim in its entirety and submits that the claim is misguided and has nobasis in law.The Defendant has counterclaimed for costs and expenses incurred in recovering the charges and defending these proceedings.The counterclaim is made pursuant to the conditions incorporated into the Mortgage.

 

BACKROUND.

8. On or around 26th March 2004 the defendant sent a mortgage offer tothe claimant and Mr Morgan offering to lend the sum of 119,195.00 to the intend to purchase a new property for which the purchase price was said to be 132,000.00.

9. The terms of the mortgage offer were set out clearly and the document will be referred to at trail for it full terms and effect.The mortgage offer was expressed to be conditional on the creation of a first legal charge over the mortgaged property and comprised an offer and to lend the sum £119,195.00 over 30 years on a repayment basis with a discounted interest rate upto and including 31st May 2005

10. The mortgage offer was also expressed to be made on and in accordence with terms and the special conditions.

11. on 29 march 2004 the borrows signed and dated a written form accepting the terms and conditions of the mortgage offer.By signing this form the claiment confirmed that she had recieved a copy of the mortgage offer including the special conditions and the defendants current fees sheduleand that she understood and accepted the terms of the mortgage offer.

12.The following conditions applied to early repayment of the mortgage:

a.Condition 17.1 of the mortgage conditions the claimant was entitled to repay the debt in whole or in part at any time.

b. Condition 17.2 of the mortgage conditions provided that if the claimant did make an early repayment of all or part of the debt (other than any interest or other charges arising by reason of the claimants failure to comply with the conditions)and assuming the mortgage offer provided otherwise,the claimant must pay to the defendant an early repayment charge.

c.Condition 673 of the special conditions set out how an early redemtion charge would be calculated and this condition replaced clause 17.3 of the mortagage conditions.The ERC was 6% of the sum repaid in the first,second and third years following completion,and in the fourth subsequent years the ERC was to be calculated as interest for the number of days between the date of redemption and the next Monthly payment date.

d.Condition 750 of the special conditions provided that if the claimant repaid her mortgage in full, 'encluding any erc payable,in the second or third year following completion of the initial advance then (the defendant) will repay to you the early settlement charge providedthat contemporaneously,with the repayment of your mortgage over the property (the defendant) provides you with an advance over a new property of an amount equal or greater to the debt repaid.If the amount of the new advance is less than the amount of the debt repaid then (the defendant) will refend the erc in the same proportion as the new advance is to the debt.

e.Condition 750 of the special conditions also states: Ant ERC will be refunded within 14 days of (the defendants) solicitor informimg (the defendant) that the new advance over the new property has been completed.You should app;y for your new advance over the new property asap.(The defendant is) not obliged to maek a new advance and the decision will be subject to (the defendnat's) product and underwriting criteria at that time as well as a satisfactory mortgage valution and cirtificate of title given bt (the defendant's)solicitor in respect of the new property together with (the defendant's) terms and conditions

 

13. Pursuant to condition 48 the claimant agreed to keep the defendant 'fully indemnified in respect of any breach or nonobservance of the mortgage'.

 

14. Furthermore,condition 49.3 of the mortgage conditions provided that:

'You (the claimant)will be responsible on a full indemnity basis for:

1.any costs,charges or expenses (including legal expenses)at all times we have to pay or bear,as well as our resonable administrative expenses in connection with any steps we take;

(a) in order to enforce any powere or sale or payment of any money due under your martgage;

(b) to protect or perfect our security;

© to remedy or secure the performance or observance of any of the terms of your mortgage:

(e) to comply with any request made by you in connection with your mortgage;

 

2.any damages occasioned to us by your default in observance or performance of any of the terms of your mortgage.

 

And codition 49.3 of the mortgage conditions provided that:

 

'you (the claimant)must pay any costs'charges,expenses or damages referred to above immediatly they are incurred paid or sustained.'

 

15. on 7th April 2004 the mortgage completed and the sums were advanced to the claimant.

16. The claimant redeemed the mortgage in full on the 8th August 2005. Since this occurred in the second year following completion the defendant calculated the ERC at the rate of 6% the rate applicable.This resulted in an ECR of £7149.64.

17. It will have been noticed that the origanal mortgage was executed in favour of Kensington Mortgage Company Ltd,but the claimant is Mortgage Agency Services Number Six Ltd.

18. On 28 June 2004, all legal and beneficial entitlements were transferred form Kensington to Mrtgage Agency Services Number Six Ltd.This included the benefit of the claimants mortgage.Accordingly,MAS stands in the shoes of Kennsington, under condition 58 of the conditions. A copy of the deed of transfer is attached.

 

DEFENCE

The ERC

 

19. I do not believe that the ERC is in any way an unfair or unreasonable charge.I do not believe that it constitutes a penalty clause or liquidated damages clause and I also think that analysis is irrelevant as there was no breach of contract.If there was a breach of contract (which is denied) the ERC could be characrerised as a liquidated damages clause.Furthermore,in my respectful submission the ERC is not unenforceable by vitue of statute or the common law (although i appreciate this will be the subject of legal submissions at trial).

 

20. The claimant was fully aware of the ERC:

 

a. The ERC was referred to in the Mortgage Offer,the Mortgage conditions.Special Conditions and shedule.It was the claimant's responsibility to read and fully understand these documents before signing.Furthermore the claimant relied on legal and independant financial advise when deciding whether or not to grant the mortgage on the terms put forward by the defendant.

b. The solicitors who acted for the claimant in redeeming the mortgage recieved correspondence on or around 28 july 20054 quoting the ERC appicable on redemption.This letter is attached.

 

22.If the court accepts the claimant's argument it is submitted that th ERC clause was a liquidated damages clause.Again,I believe this will be a matter for legal submissions.However,at this stage I can expalin that the clause does equate to a pre-estimate of loss.For example:

 

a.By redeeming early the defendant lost a significant amount of revenue which they would have recieved had the claimant continued to pay throughout the mortgage term:

b. If the claimant had continued to pay throughout the mortgage term the defendant would have recovered some of the costs spent in obtaining the funds for the mortgage advance,making the advance and servicing the nortgage over its expected lifespan.It should be recognised thet the defendant borrow's money on the money market inorder to be able to provide the mortgage products and commits its self to borrowing funds over the same fixed period at slightly lower rates than those offered to borrowers so as to make a small profits.Therefore if a borrower redeems her mortgage before the end of the fixed term, for example to take advantage of lower rates elsewere,the defendant is still commited to it's own borrowing at the origanal rate but it cannot re-lead the money at the interst rate orriganally offered to the borrower.Therefore, the defendant will suffer a loss over the remaining term of the fixed rate period and the ERC is designed to compensate the defendant for this;

 

Sorry this is so long winded but there are also points 22-28 do you still require this to be posted if so I shall do this later.

 

I'm assuming I need to send a defence to all this by the dates set out above any comments or help will be again greatly appriciated.

x

[zootscoot]

CLAIM NO XXXXXX

 

 

 

 

BETWEEN:

 

 

 

JAMORGAN

 

 

 

Claimant

 

 

 

 

and

 

 

 

 

Mortgage Agency Services No 6 Ltd

 

 

 

 

 

 

 

Defendant

 

 

 

 

 

1.Paras 1-18 of the Defendant's defence are admitted.

 

2. Para 19 is denied.The Claimant was in breach of a major term of the contract. The particular term in the mortgage which was breached was an express term relating to the period of thirty years for which the mortgage was to run. This term of the contract was clearly stated in the written mortgage offer signed by the claimant. The terms of which were incorporated by reference into the mortgage deed which was not only signed, but also witnessed. There is clearly no room for doubt that such a clause existed in the contract. Similarly, there is no question that the claimant in fact redeemed the mortgage on the xx/xx/xxxx as evidenced by the final redemption statement. This date is clearly well before the contractually agreed date of xx/xx/xxxx and thus represents a clear breach of the contract.

 

3. To further the contention that a breach of contract did in fact occur, it is submitted by the Claimant that during the period of the thirty years the Claimant was clearly under a contractual obligation to pay monthly instalments to the Defendants and clearly has not made such payments since the redemption of the mortgage.

 

4. The Claimant accepts the contention that redemption of the mortgage was expressly provided for in the mortgage offer under Condition17.1. Condition 17.2 provides that an early redemption charge was payable in the event of redemption and thus represents a charge that is payable in the event of a breach of contract. Conditions 17.1.and 17.2 merely anticipate a breach of contract and thus does not represent the exercising of a right under the contract.

 

5.In the event that the court were to find the said term as exercising a right and without prejudice to the above paragraph it is submitted that the fact that such a term exists does not prevent a court finding of breach of contract following the House of Lords decision in Bridge v Campbell Discount[1962] AC 600. This case was decided upon the finding of a breach of contract, The finding of a breach of contract as oppose to the exercising of an option was based on the fact that to amount to an exercising of an option there had to be intention to exercise the option demonstrated by the hirer. When the Claimant terminated the mortgage early it was purely to be free from the burden of the contractual obligation. The Claimant was not aware that she was exercising an option to terminate but merely knew that if she did end early she would have to pay a penalty. If she is am unaware that she is exercising a right how can it be said that she intended to exercise such a right. (You may want to add here any reasons which forced you to end early in order to strengthen your argument).

 

6.Furthermore, in Bridge v. Campbell Discount Co Ltd Two of their Lordships (Lord Denning and Lord Devlin) went further in their findings, holding that even had the hirer exercised the option, they would still be prepared to strike down clause 9 as a penalty and thus were of the opinion that Associated Distributors, Ltd. v. Hall was wrongly decided. This, as a minority decision, however, is not binding, but the Claimant invites the court to consider this as persuasive authority in the light of advances in consumer protection legislation since the decision.

 

7.It is the Claimant’s submission that term relating to the Early Repayment charge is merely a penalty clause disguised as an option to exercise a right. It is respectfully requested that the court should look to the substance of the clause rather than the form. It is thus asserted that clauses 17.1 & 17.2 when read together are simply a pretence at conferring a right to exercise an option when in essence it is simply a term setting out the consequences of a breach of contract and as such in the absence of a genuine pre-estimate it amounts to a penalty. As such, the clause can thus be seen as ambiguous as there are two possible interpretations of clause. In the event of ambiguity in a written contractual term, the contra proferentem rule requires the court to resolve any ambiguity against the party who drafted the term. In this regard I would also like to rely on Regulation 7 of the Unfair Terms in Consumer Contracts Regulations 1999:

 

7. - (1) A seller or supplier shall ensure that any written term of a contract is expressed in plain, intelligible language.

 

(2) If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail

 

8. The Claimant denies the contention by the Defendant in para 19 that the term relating to the early repayment charge is a liquidated damages clause. A contractual term which provides for a specified amount payable (whether by a fixed sum or calculated by way of a percentage) must represent a genuine pre-estimate of loss if it is to be regarded as a liquidated damages clause Dunlop Pneumatic Tyre Co. Ltd. v New Garage & Motor Co. Ltd. [1915] A.C. 79. The Claimant has repeatedly asked the Defendant to provide the claimant with details of how their charge was calculated to represent a genuine estimate of their loss. The Defendant has failed to respond to this request and thus the claimant is of the opinion that no genuine pre-estimate indeed took place. The Claimant thus makes a respectful request to the court that disclosure of this information is provided to the claimant forthwith to bring an expeditious termination to the proceedings.

 

9. Further, in relation to paragraph 19 of the Defence, the Claimant contends that if the Defendant complies with the Claimant’s request to provide a breakdown of losses to which the Defendant has been put to, it would reveal that the charge levied would in fact be revealed to be a disproportionate penalty under the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). The Claimant’s account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as the Claimant is a consumer. The charge constitutes an unfair penalty under Schedule 2 of the said Regulations which provide an indicative and non-exhaustive list of terms which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms which have the object of requiring any consumer, who fails his obligation, to pay a disproportionately high sum in compensation. The Claimant vigorously contends that this is the position regarding the fee of £XXXX which the Defendant deemed fit to apply to the Claimant’s account. It is further submitted by the Claimant that the Defendant’s failure to provide such information is for the reason that such information would reveal that the term is in fact a disproportionate penalty. Had the defendant been able to demonstrate that the charge was indeed a liquidated damages clause it has had ample opportunity to do so and the Claimant would not have need to initiate these proceedings. It is thus respectfully submitted by the claimant that the Defendant’s defence be struck out as an abuse of process or in the alternative that an order to disclose this information is made so as to satisfy the claimant that the charge is indeed a liquidated damages clause.

 

10. Furthermore it is submitted that clause 49.3 of the mortgage conditions is unenforceable by virtue of s.4 Unfair Contract Terms Act 1977. It is respectfully submitted that the clause is unreasonable with in the meaning of s.11 of the said Act.

 

11. Para 20 of the Defendant’s defence is admitted.

 

12. Regarding Para 22 the Defendant has not given a breakdown of its actual losses nor provided a response as to how it came up with a genuine pre-estimate of its losses. A fee calculated by terms of a percentage of the sum repaid can not amount to a genuine pre-estimate of the Defendant’s loss, but moreover represents a fee levied with a view calculated to profit from the claimant’s breach, to act as a clog on the equitable right to redeem or to punish the claimant for its breach of contract. Furthermore it is contended that the reasons thus far provided by the defendant fail to take into consideration the duty of the defendant to mitigate its loss in accordance with the principles set out in Payzu v Saunders [1919] 2KB 581.

13. The Claimant agrees with para 22 c of the Defendant’s application in as much that the Defendant has the right to set a liquidated damages clause and this would be perfectly acceptable to the Claimant. However, the Claimant contends that the early repayment charge did not amount to a genuine pre-estimate of loss and that it was excessive in relation to any loss which could conceivably flow from the Claimant’s breach of contract.[You may want to add something here regarding how the amount of the ERC was difficult to calculate eg was it based on a percentage]

14. In relation to para 22 d, the Claimant contends that the this para is irrelevant to the present proceedings and in any event the Defendant already charges some of the highest fees and interests rates on the market. The set up costs charged by the Defendant were £xxxx compared to other lenders fees which are typically £xxx. The interest rate commenced at x.x% and rose to xx.x % comparable to typical lending rates of x.x%. The Defendant’s concern about being disadvantaged in the mortgage market place is misleading in that the Defendant specialises in sub prime lending where the choice available to consumers is significantly narrowed allowing the few commercial entities that lend in this specialised market to charge fees which border on extortion.

15. In relation to para 22 e, the Claimant has never suggested that any other consumers bear the burden of any loss sustained by the Defendant. The Claimant is happy to pay any actual cost incurred by the Defendant in relation to the Claimant’s inability to continue with her contractual commitments. In fact the Claimant has repeatedly asked the Defendant to provide her with a breakdown of such costs which the Defendant refuses to do.

16. The Claimant contends that the early repayment charge was an unfair term under the Unfair Terms in Consumer Contracts Regulations 1999 and in relation to para 22 of the application would refer the court to the submissions outlined in para 9 above.

17. In response to para 23 a, the Claimant denies that the ERC was a core term relating to the adequacy of the price of the mortgage. It is the Claimant’s submission that the ERC was a sum payable on breach of a core term of the mortgage in accordance with para 2-4 outlined above.

18. In relation to para 23 b, the Claimant contends that the ERC was contrary to the requirement of good faith as it exceeded any actual loss to the Defendant, was levied with a view to profit, was designed to act as a clog on the Claimant’s equitable right to redeem so that the Defendant could continue to increasing the interest rate payable which it contributed to the Claimant’s inability to meet her contractual obligations.

19. In relation to para 23 c, the Claimant refers the court to para 7 above.

20. The Claimant contends that the ERC did cause a significant inmbalance in the parties rights and obligations and denies para 22 d. The Claimant was in a vulnerable position in that she had a history of light adverse credit. The Defendant was in a significantly stronger position in that they are leaders in a niche market in providing mortgages in the sub prime sector. The Claimant was paying an interest rate above the High street lending rate and was not in reality getting a discounted rate but was paying a premium rate. The Claimant had limited choice in the mortgages available to her.

21. In response to para 22 e the Claimant contends that the ERC was detrimental to the consumer for all the reasons outlined above. The Claimant strongly refutes the suggestion that she had the option of continuing the mortgage for three years to avoid the ERC. The Claimant was unable to meet her mortgage instalments once the interest rate rose to such a level that the mortgage payments had increased from the initial £618.00 to £894.00. This was beyond the means of the Claimant. Whilst the Claimant accepts that the Defendant had the right to increase the interest rate within the terms and conditions the Claimant, perhaps naively, did not expect to see such a dramatic increase in such a short space of time.

22. In response to para 24 the Claimant accepts that she had independent advice and was aware that the charges were applicable. However she did not expect to be forced in to the position of having to redeem the mortgage so early due to the excessive hikes in interest rates.

23. In the premise of all the above, the claimant respectfully submits that the claimant does indeed have a legitimate cause of action which should be allowed to proceed to trial in the event that the defendant continues to refuse to provide the claimant with the information requested to satisfy the Claimant that the fee levied by the Defendant was indeed lawful.

 

24.The Claimant further submits that the Defendant has not provided a satisfactory cause for the claim to be struck out nor provided a legitimate reason for its accusation that the Claimant has abused the court process. Indeed had the Defendant complied with the Claimant’s requests for information the Claimant would not have needed to seek redress through the courts.

 

STATEMENT OF TRUTH

 

 

I believe the facts stated within this defence to be true and comprising of X pages.

 

 

Dated: xx/xx/2006

 

Signed: Jamorgan Smith

[zootscoot]

Are points 22-28 in relation to the counter claim?

 

You need to send a copy to the court and the defendant by the dates given.

 

The evidence they refer to would be any correspondence you have, the mortgage offer, Terms and conditions any sttutes and cases you are relying upon.

 

Have a look at Bookie's court bundle here:

 

http://www.consumeractiongroup.co.uk/forum/bank-templates-library/33060-basic-court-bundle.html

 

Not all of this will be relevant as some of it may be specific to banks. Also it may not contain all the cases you are relying on. If there are any missing let me know and I'll see if I can get them for you.

 

All the best

 

Zoot

[mrpromiscous]

wow zoot i was just reading a few threads to get a better general understanding of the ERC argument and damn missus..... u really knock up a blinding letter !!!

 

MrP

[hulsevictoria]

This is a great case to follow in order to learn about the legal process I will be facing.

I'm educating myself by following this case.

Know your enemy. Thank you Jamorgam and Zoot for educating me. I'm following this case closely.

Have a Prosporus New Year.

[jamorgan]

I thought I would post points 22-28 just incase there is anything that could be of relevence.

 

22.

c.If the defendant did not give mortgagors prior warrning of the exact ammount of the ERC, the alternative would be for the borrower to pay the defendant acctual costs of adjusting it's position.The exact loss can vary over the term of the fixed rate.The defendant obviously cannot assess this in advance with any certainty and therefore if this system had been adobted the claimant would not have been able to see how much she would have had to pay for her early redemption at the time of granting the mortgage.The method of calculation adobted by the defendant (and most other lenders I believe) provides the certainty of a gaurenteed and quantifiable price of early redemption before an individual borrower enters into the mortgage contract.By setting an ERC in advance based on the calculation of the fixed rate period the borrower is always able to tell exactley how much it will cost to redeem;

d. Without an ERC commercial consiquences for borrowers would be higher than the initial fees allternativley higher rates of interest both of which do not opperate in the interests of the consumer.It would also leave the defendant at a significant competitive didadvantage in the mortgage market place;

e.The defendant also believe's it is fairer for the consummers who choose to redeem at an early stage to foot the costs of that early redemption rather than imposing extra costs on the consumers who continue to make payments under their mortgage;

 

23.Equally I do not belive that the charges can properly be construed as an unfair penalty under the Unfair Terms in Consumer Contracts regulations or the unfair contract term act.This will be elaborated in legal submissions but at this stage Iwould like to make the following points:

 

a.The ERC was a core term of the Mortgage contract between the claimant and the defendant. I believe the reason for this is that this is part of the deffenation of the main subject matter of the contract and because it directly concerns the adequacy of the price or remuneration the defendant was to recieve in return for making the loan available to the claimant on the agreed terms. As the ERC affected the price of the services supplied, it is a core term and is not to be assesed for fairness;

b.The ERC wasn't contrary to the requirement of good faith;

c.the ECR was in plain intelligible language;

d.The ERC didn't cause a significant inbalance in the parties rights and obligations.In this case the ERC was simply inposed in return for the claimant getting a cheaper mortgage.It was the calimant's choice to enter in to the mortgage agreement, and in making that decision the claimant had independant legal and finacial advice;

e.The ERC was debtrimental to the claimant as a consumer:

The claimant was entirley free to act as she chose.If the claimant wanted to avoid the ERC she could have waited untill three years had passed form inception and provide one months written notice.

 

24.Furthermore it should be noted that the claimant relied on legal and independant financial advice at all times when deciding wether or not to enter into the mortgage.The legal advisor and the independant finacial advisor were employed by the claimant and they had a resposibility to make the claimant aware of the charges applicable to the claimants account.A copy of a letter from the defendant to the claimant dated the 21st July 2006 expaining this to the claimant is enclosed.

 

25. Accordingly,I donot believe that the claim for the return of the ERc has any real prospect of success at trial or a reasonable chance of succeeding. In my submission the court should dismiss the claim and enter judgment for the defendant with interset and costs as set out in the defence and counter claim.

 

COUNTER CLIAM

 

26.In accordance with conditions 48&49 of the mortgage conditions and clauses the claimant agreed to indemnify the defendant in respect of any costs the defendant reasonably incurred in dealing with the discharge of the mortgage.The defendant also claims interest on those costs.The defendant denies that this condition is in any way unfair or unreasonable in any event the defendant is entitled to and will seek if necessary an order for costs pursuant to the courts genral discretion.

27.Accordinly, the defendant is entitled to and does seek to recover all costs the defendant incurred in relation to these proceedings.The defendant also seeks interest on those costs.

 

SUMMARY

28.In summary I belive the claim should be dismissed and I respectfully ask the court to enter judgement for the defendant on it's counter claim with costs pursuant to contract alternativly in the courts discretion and interest on that sum for the defendant.

 

Sorry about the delay in the last bit of the application but think every one need to see it

x

[zootscoot]

Hi Jamorgan,

 

Can you tell me what interest rate you were paying and what choice of other lenders you had to chose from?

[jamorgan]

Hi zootscoot (my rock)

I got in touch with a recomended broker (White knight partnership)

Everything was done over the phone and we did not have a choice of who we could lend with,White Knight just automatically sent me the details below and that was it. (I didn't know anything about mortgages) so we just let them carry on because to us we would be getting our dream house.

They told me that my husband and I had what they called light adverse credit and told us we would pay a little extra for self cert (I had returned to work part time) and we would also have to use their solicitors too.

In Feb 2004 they sent me these details:

 

LOAN DETAILS

Company Kensington

Loan ammount £118800.00

Property value

purchase price £132000.00

Interest only £118800.00

interest rate 6.25% (discounted at 1.75%)

standard fees £1175.00

MIG £1068.56

Arr fee £395.00

Status Self Cert

Future % 8%

Redemption 6% 6% 6%

Term 30 years

Product 1 year discount

Application fee £295's.00

We mooved in on the 7th April 2004 by June,september,December,2004 The interest was raised by Kensington. (a quartley thing)

We were initially going to pay £618.75 (as stated in the paper work white knight sent)And were then advised that the interest rate had gone up before we signed and that we would now be paying £641.00 a month and the amount of this payment will be reviewed in accordance with the t&c.

In july 2004 it went up to £689.00 by Oct 2004 it went up to £721.00 then it did go down to £715.00 in Jan 2005 Then upto £719.70 in March

Then we recived a letter in May to say our payments would be £894.23 a month at a rate of 8.950% (as the yearly discount would have ended)

So we initially had gone from £618.00 to £894.00 and they had the right to up the interest every quarter according to there t&c.

I did contacts them and ask if they could offer a better deal than this for May 2005 as we could not afford to have them up the interest rate when they felt like it.

 

This company knows exactly what their doing.

They want pepole to pay these ERC's im sure of it and it shouldn't be allowed.

This company has got me and my husband in a mess, a real big mess.

 

Hope this is ok

Thanks again hun

x

[ellielou]

That is discusting Morgy - how do they get away with it? I was lucky that I was advised to take out a fixed rate with them, soeven though my rate was 8.65% at least I knew it would stay the same.

 

However, on the positive side - hearing stories like that makes me more determind to get my money back from them

[jamorgan]

Thanks for the support \ellielou,

I have just recieved another letter form Drydens (there solictor)

 

Please find enclosed,by way of service, our client's skeleton argument for hearing 19th January 2007

Should I post the details Zootscoot

x

[zootscoot]

You could scan and e-mail it if its easier.

[The Avengers]

Hi

 

We're watching this case closely because we are in a similar position to JAMORGAN, but worse! We have done the groundwork for ERC recoveries from Swift, Preferred, Kensington and GE Home Lending (iGroup). Each of the ERCs for these four lenders are for between £16,000 and £18,000. We feel we have been completely ripped-off.

 

The only obstacles we are very conscious of is the legal costs associated with our taking each of the above to court. It's so unfair.

 

Maybe someone could consider starting a co-operative legal fund to really help the growing number of people who have been affected by these companies.

 

Has Zoot got any advice? We are particularly wondering about how we stand with the legal process costs because of the high ERCs involved with our cases. Most of the cases we have researched on this site and elsewhere seem to involve lesser amounts and have been taken through the lower courts. Our worry is the additional stress and hassle related to having to go via the High Court.

 

Look forward to hearing from someone with their thoughts.

 

Zoot has really encouraged us to go for this and the value of having someone so obviously well qualified to smooth the way is absolutely invaluable.

[jamorgan]

Well that's bloody awful.

I cant offer you any help, but I am sure zootscoot can lead you in the right direction. It's sole distroying how these companies can treat people the way they do and worst of all get away with it.What ever the circumstances everyone should be treated fairly.

We did not want to change mortgage companies and pay this ridiculous amount in charges but they gave us no other option, there interest rates rose in the first year every quarter, i think they classed it as a conssentionary interest rate and after the first year we could not aford for it to happen again in the second and third year. we just could not take that chance.

Were no better off now, we have had to borrow more money to cover the ERC fees,Brokers fees again,higher lending fee, arrangement fee etc.

We only wished we had been a bit more switched on with the mortgage side of things, and took our time on getting some more advice before we entered into these agreements,but its too late now, we were so nieve at the time.

It will not happen to us again, we have lost too much money over the past three years to go down this road again.

 

Good luck to you and your familly you deserve it.

x

[The Avengers]

Thanks for your support. We've felt under siege for so long. We didn't learn our lesson because we fell victim to rip-off ERCs FOUR TIMES!

 

We thought we'd said goodbye to our money - but now there's hope. This website and the actual and moral support it brings has lifted us a lot over the last few months.

 

Good luck with your court case next week. We'll be rooting for you!!

 

Hopefully, Zoot will give us some advice regarding our initial queries regarding High Court issue for the large amounts we intend to claim.

[jamorgan]

Ok here's the skeleton argument that the solicitor's have sent me a couple of days ago.

 

DEFENDANT'S SKELETON ARGUMENT FOR HEARING ON THE 19TH JANUARY 2007

 

1.The Claimnat seeks to recover £7318.32 that she paid as a charge for early repayment of her mortgage with the Defendant (in factwith its predecessor in title). The Defendant denies the claim and counterclaims the costs of these proceedings pursuant to the mortgage contarct.The matter is listed for a case management conference on the 19th Jnauary 2007.but by order of HHJ Hickinbottom dated the 14th December 2006 the court has also listed for the same hearing the Defendant's application dated the 8th December 2006 to strike out the claim or for summary judgement in favour of the defendant.

2. The facts are set out in more detail in the witness setatement dated 28th December 2006 for the defendant,but in summary:

(a) on 7th April 2004 Kensington Mortgage Company Ltd advanced the claimant and her husband £119,195.00 secured by a mortgage on their property;

(b) on 28th June 2004 Kennsington Mortgage Company Ltd transferred its business,including this mortgage,to the defendant;

© on 8th August 2005 the claimant redeemed the mortgage in full,including payment of the ERC.

3. In applying the ERC,the defendant was relying on;

(a) cndition 17.1 of the mortgage conditions entitling the claimant to repay the debt at any time;

(b) condition 17.2 of the mortgage conditions requiring the claimant to pay the ERC if she made an early repayment of the debt;and

© condition 673 of the special condition,which set out how the ERC whould be calculated (i.e 6% of the sum repaid in the first three years of the mortgage.

 

4. The claimant does not dispute that these were the terms of the mortgage contract or that the mortgage account was redeemed-see paras 2&4 of the defence to counter claim.

 

5. The basis of the defendant's application for strike out /summary judgement is that the particulars of claim disclose no reasonable grounds for bringing the claim (cpr 3.4 (2)(a)) and that the claimant has no real prospect of succeeding on the claim (cpr 24.2(a)).

 

6.The claimant's case is that the conditions provided for the erc are unenforcable as a penalty clause.This cannot be correct,because the erc was not payable in relation to a breach of contract,as is the requirement of provision to be considered penality;see chitty on contracts,29th addition 2004,26/109; " where the parties to a contract agree that, in the event of a breech the contract breaker shall pay to the other a specified sum of money,the sum fixed masybe classified by the courts either as a penalty (which is irrecoverable) or as liquidated damages (which are recoverable)[emphasis added]

 

7. In this case,there was no breach of contract,because the contract (mortgage cond 17.1) expressely gave the claimant the right to repay the debt early and of course the other paymant provisions had to be read subject to that provision.

 

8. The claimant argues (para 5 of the defence counter claim) citing Bridge vs Campbell Discount Ltd [1962] ac600, that a court can still find that there has been a breach of contract even where an exspress contractual right has been excersied.

 

9. Bridge vs Campbell is not authority for such a proposition.In that case the claimant hired a vehicle from the defendant the contract provided that he could terminate the agreemant on written notice,but would then have to pay specified charges. The House of Lords did not determine wether those charges constituted a penilty,since they determind that the claimant have not in fact terminated the agreement as provided for by the contract;he had not been able to pay the hire charges and written a letter as follows "owing to unforseen personnel circumstances I am very sorry that I will nor=t be able to pay ant more payments on the Bedford Dor mobile.Will you please let me now when and were I will have to return the car. I am very sorry reguarding this but have no other alternative."The House Of Lords found that as a matter of construction the claimant was not thereby given notice of the terminastion of the contract,but was simply acknowlegding that he was in breech of the contract.Accordinlly provisions require payment of the charges were not triggered.

 

10. In the present case it cannot argues that the claimant was not exerciing the right to early redemption of the mortgage but was merly in breach of the contract; there is only one possible interpritation of her repayment of the whole of the outstanding mortgage debt;more over,her payment included the erc, as she would have recognised from the redemption statement.

 

11. If the defendant is wrong and the erc is payable on breach of contract,the defendant would argue that the erc represents liquidated damages rather than a penalty , as set out in para 22 of the witness statement of Drydens.

 

12. The claimant also claims that the provisons realting to the erc fall foul of the unfair terms in consumer contract regulations 1999 on the basis that para 1 (e) of schedule 2 to the regulations classes terms as unfair were they have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation (para 7 of the deffence to counterclaim).

 

13.Again,the claimant has no prospect of success on this argument;

a. para 1 (e) of shed 2 to the regs could not apply,since,as set out above, the erc was applied because of the claimant decision to repay the debt not because of a failure to meet the obligation;

b. regulation 6 states that the assesment of fairness shall not apply to a term relating "to the adequacy of the price or renumeration"; the erc was intergral to the cost of the mortgage and is not therefore subject to the regs;

c. it would be a striking conclusion,with enormous repurcussions,that erc, which apply to the vast majority of mortrgage products,are unfair;

d.further factors are set out in para 23 of the witness statment for the claimant.

 

14. If the defendant is successful, it will seek its costs;

a on an indemnety basis in accordance with mortgage conditions 48&49;

alternatively

b in the discretion of court in the orrdinary way

 

Anything to add

x

[gizmo111]

AFAIK The costs under the contract is stupid as the contract no longer exists.

Don't forget this :

 

I would like to bring your attention to the following statement by The Office of Fair Trading:

 

"A term in a mortgage agreement which requires the borrower to pay more for breaching the contract terms than actual costs and losses caused to the lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressed as the price for exercising a right rather than a consequence of breaking the agreement."

Have you a full hearing on the 19th

[zootscoot]

Hi Jamorgan,

 

I've added some para graphs above in relation to points 22-25.

 

Can you confirm with regards to the counter claim that those are the exact wording and they are no longer relying on the clause of the contract to claim costs incurred in bringing the claim.

 

Also have you sent off your draft directions yet?

 

I did contacts them and ask if they could offer a better deal than this for May 2005 as we could not afford to have them up the interest rate when they felt like it.

 

 

Do you have a copy of this letter as it could be used as evidence for the breach of contract argument.

 

The Avenger,

 

Please start your own thread otherwise things get a little complicated.

 

Cheers

 

Zoot

[jamorgan]

Hi all,

 

Zoot with regards to the COUNTER CLAIM 26. (above) just copied it from what solicitor had sent us through post.

 

As for the bit about contacting the mortgage about the rise in interest rate, it was done over the phone.I pleaded with them to look at our situation and see if they could set up a fixed deal/lower rate,as we did not now wether this rate would just keep on climbing. They could not help us and the 8% plus any additional rises would still stand.

I then asked if they could at least tell us what we would be paying after the year was up and I found a letter dated 31st january 2005

 

further to your recent contact with the customer contact centre.

 

We acknowledge your request for a quote on your monthly payments on the basis of the default interest rate.As the interest rate is set on a quartly basis we advise that you contact us after the next interst rate change,which will be on the 10th March 2005

If you contact us after this date we will be able to provide you with an accurate quote.

 

Also just found another letter which states that the same solicitor that we HAD to use was also representing Kensington Condition 627 (didn't think this was allowed) and Kensington will be paying a fee to the broker or financial advisor once mortgage is complete.

 

As for sending the draft for directions I have not sent anything at all to any body since my Defence to counter claim dated the 25/10/06

 

and this is for Gizmo

It's not a full hearing Giz, only a case management conference the application to strike out our claim shall be heard at 12.30 on the 19th jan 2007 at time estimated of 1 hour and I have to serve and file evidence by the 12th Jan

 

x

[Sue_de_Nimm]

Wow, they are really taking this to the wire, arent they? But that is typical of them, they are utterly ruthless.

They believe you will fold before a court appearance, in fact I would say they will go as far as setting a court date AND turning up & trying to freak you out before the hearing starts. Thats what they do.

I had them take me to court for respossesion & their slimy lawyers try & find out what youre going to say in court. I gave mine a lecture about how he was ruining his career working for such crooks & kept a major part of my argument from him, so he ended up losing, whereby he got another lecture from me (out of earshot of the judge )

Fairly sure Kensington are prepared to throw any amount of money at lawyers - and Im also fairly sure they are on the payroll (& cheap) so its not costing them.

God I can hardly wait until we start squeezing money out of them!!!

[jamorgan]

Zootscoot,

Just a recap,

Now the application to strike out the claim will be the topic in this 1 hour conference case mangemant on the 19th Jan,Should I still send the list for directions along with the defence to strike out that you prepared for me, staright away.

Also do I need to do anything else in between.

And can I take anybody along with me to the case management conference.

SOrry to keep on but I don't want to mess up on anything.

I'm a bag of nerves and I do not know what to say at this court meeting.

x